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Protection against holiday rentals

Spain has come in favour of the tenant to strengthen its rental laws. It has done this with a bid to stop short term lets dominating the housing market. The move will help maintain the rental property for tenants especially in areas of high demand such as city or beach locations in Spain

This change in the law will allow property owners as a collective to decide whether or not to allow short-term holiday rentals in their buildings by calling a vote.

The most relevant changes are:

Increase of rent limited. It should not surpass the CPI, consumer price index, within the contract period.

Contracts extended. The mandatory extension will be of five years instead of three or seven if the owner is a business.

Aside from a one-month guarantee, landlords can only request tenants for an “additional deposit” of two months.

Tenant protection. Lease agreements must be respected by owners, even if they decide to sell the property whilst a rental contract is in place.

If the tenant is found under a “vulnerable situation”, evictions may be delayed one month or three if the tenant is a legal entity.

Benchmark index. The Government will develop, in the next eight months, an index that reflects trends in the rental market to help determine if the asking price is fair.

Tourist rentals. Holiday leases are excluded from the new law and remain in the hands of the community that have the power to limit these types of rentals.

The legislation is designed to prevent Spanish housing becoming inaccessible in major cities

On Wednesday 6th March 2019, five days after it was approved by Cabinet, a new decree regulating residential property rentals came into force in Spain, containing important modifications to existing laws with the aim of protecting the interests and rights of tenants.

The main innovations contained in the decree are that all new rental contracts finalized after 6th March should be for a minimum period of five years rather than three (and seven years if the landlord is a company), and that rent increases during the contract must be limited to the inflation rate.

These rules are designed to keep housing affordable, and come in the light of increasing concern over mushrooming rental prices in large cities and provincial capitals over the last couple of years, particularly in Madrid and Barcelona.

Longer Spanish Property Leases

Average tenancy contracts will go from being three to five years long, or seven years in cases where the landlord is a legal entity. It’s a measure meant to give greater security to the tenant, but the measure, as is the case with all others, isn’t retroactive.

In cases where the rental agreement expires and neither the landlord nor the tenant make their intentions vis-à-vis the property known, the implicit renewal of the tenancy agreement (known as plazo de prórroga tácita in Spanish) will now be of three years rather than one.

Longer terms of notice

After the mandatory renewal period outlined above, landlords are legally obliged to provide four months’ notice to end the contract – up from a previous two months.